Advantage Announces Completion of Strategic Alternatives Review, Disposition of Longview Common Shares, Three Year Development Plan & Glacier Phase VII Budget Approval

Highlights

 Advantage Oil & Gas Ltd. (“Advantage” or the “Corporation”) announces that its strategic alternatives review process has been completed and did not result in an acceptable proposal.

 Numerous corporate and operational achievements have positioned the Corporation as a focused, industry leading, low cost Montney natural gas producer.

 Advantage has significantly improved the balance sheet through the announced sale today of its Longview Oil Corp. ("Longview") common shares and previously announced divestments of non-core conventional assets.

Advantage’s development plan is expected to drive 190% cash flow per share growth and 100% production per share growth through increasing production at Glacier to 245 mmcfe/d (40,800 boe/d) in 2017, while targeting an average total debt to cash flow of approximately 1.5 times (1)(2).

 Achievements in our current Glacier Phase VI capital program contributed to record production of 124 mmcfe/d entering January 2014, a record 13 mmcf/d(3) liquids rich Middle Montney well and confirmed economic production potential from the Upper, Middle and Lower Montney across Glacier providing clear visibility for future growth.

1) An updated February 2014 investor presentation has been posted to our website which contains details on our three year development plan and approved Glacier Phase VII budget.

2) All references to total debt are at the end of each development phase. Cash flow is based on forward cash flow and may also be referred to as funds from operations.

3) All references to well production test rates are final test rates normalized to our average gas gathering system pressure of 3,000 kpa unless otherwise indicated.

Strategic Alternatives Review

With the assistance of its external financial advisors, FirstEnergy Capital Corp. and RBC Capital Markets (collectively, the "Advisors"), Advantage conducted an extensive and thorough strategic review of the alternatives available to it that included a broad global marketing effort to solicit interest in a sale of the Corporation or other transaction to maximize value for all shareholders. During the process, the Corporation received expressions of interest in respect of a variety of potential transactions. None of these proposals were determined to be in the best interests of the Corporation and do not adequately reflect the intrinsic value of the Corporation based upon its assets, operations and prospects for growth.

With the formal conclusion of the strategic alternatives review process, the Board of Advantage unanimously supports the Corporation’s three year development plan for Glacier which targets strong per share growth in production and cash flow. Based on an average natural gas price of AECO Cdn $3.75/gj (strip pricing as of January 28, 2014 for 2014 to 2017), recent well results and cost performance, this plan can be completed within existing financial facilities and at a targeted average total debt to cash flow of approximately 1.5 times.

The Board will always consider potential alternatives that may arise which are in the best interests of the Corporation and its shareholders as the business continues to grow and evolve.

Advantage continued to achieve significant operational and financial success during the strategic alternatives review period and is now well positioned as a low cost, focused Montney operator with a clear strategy to drive strong per share growth. Key accomplishments which advanced this strategy include:

 strengthened its balance sheet by repaying debt and increasing the size of the Corporation’s borrowing base from $230 million to $300 million;

 reduced its bank debt by 58% to $64 million and reduced total debt by 31% to $199 million based on Advantage’s estimated bank debt and total debt at December 31, 2013 pro forma net proceeds from the sale of Longview common shares;

 improved well productivity in the Upper, Middle and Lower Montney through modified drilling and completion techniques resulting in robust well economics across Glacier;

 further established itself as an industry leading low cost Montney natural gas producer by reducing Glacier operating costs from approximately $3.00/mcfe to $0.28/mcfe, combined with an attractive low royalty rate of approximately 5% for the life of a Glacier well. G&A cash costs are expected to be reduced to approximately $0.20/mcfe in the latter half of 2014 and less than $0.20/mcfe in 2015;

 acquired an additional 43.25 net sections (27,680 net acres) of Montney land holdings (100% working interest) in the Valhalla and Wembley areas that will complement its core Glacier holding of 77.1 net (49,344 net acres) Montney sections and;

 secured natural gas hedges that will reduce volatility of future cash flows to March 2016 in support of our Glacier development plan.

Disposition of Longview Oil Corp. Shares

With the conclusion of Advantage’s strategic review process and in support of its multi-year growth plan, Advantage has entered into an agreement to sell the 21.15 million Longview common shares owned by Advantage at a price of CDN $4.45 per share for aggregate gross proceeds of CDN $94.1 million. Closing of the offering is anticipated to be on or about February 26, 2014, and all of the net proceeds will be used to reduce Advantage’s existing bank indebtedness.

Termination of Technical Services Agreement

With the continued progression of both Advantage's and Longview's business plans, the companies have terminated the Technical Services Agreement (“TSA”) originally entered in April 2011. The termination of the TSA and disposition of Advantage’s Longview common shares will reduce financial and operational complexity and simplify our organizational structure.

The TSA previously provided that Advantage make available the necessary personnel and technical services to manage Longview's business. Appropriate staffing and systems are now in place to enable both organizations to run independently following termination of the TSA.

Advantage would like to acknowledge the commitment and dedication of all staff and personnel that have contributed to the requirements of the TSA.

Management and Board of Advantage Oil & Gas Ltd.

The management of Advantage will continue to be led by Andy Mah, President and Chief Executive Officer and Director, Neil Bokenfohr, Vice President Exploitation, and Craig Blackwood, Vice President Finance and Chief Financial Officer. Mr. Blackwood has resigned as Chief Financial Officer of Longview to focus entirely on Advantage. This executive team has provided oversight and leadership since development began at Glacier in 2008 and is committed to successfully executing on future growth plans. Advantage will retain a complement of 25 employees to support the ongoing operations of the Corporation. Going forward, we anticipate that cash general and administrative expenses will be reduced to approximately $0.20/mcfe during the last half of 2014 and are expected to be less than $0.20/mcfe in 2015.

In addition to Mr. Mah, the Board includes three independent directors, Messrs. Ron McIntosh (who has been elected Interim non-executive Chairman), Stephen Balog and Paul Haggis. Mr. Steven Sharpe (former non-executive Chairman) has resigned from the Board to attend to family matters which have arisen recently. We wish to specifically thank Mr. Sharpe for his leadership, expertise and dedication during the strategic alternatives process and for his many contributions to Advantage during his tenure. The Board has initiated a process to recruit additional Board members with a particular focus on individuals with the skills that will further assist in the development and growth of our world class Montney assets.

Glacier Development Plan Expected to Double Production to 245 mmcfe/d in 2017, Glacier Phase VII Capital Budget Approved

As a result of continued operational success at Glacier since 2008 and the numerous milestones achieved during our current Glacier Phase VI capital development program, the Board of Directors of Advantage has endorsed a multi-year development plan through to 2017. Additionally, the Board of Directors has approved the Glacier Phase VII Capital and Operating Budget for the 12 months ending March 31, 2015.

Current Phase VI Glacier Capital Development Program Achievements Set the Stage for Future Growth

Numerous successes during our current Phase VI capital program have been pivotal in advancing our growth strategy at Glacier and include the following key accomplishments and implications:

 Increasing Glacier production to a record 124 mmcfe/d entering January 2014. Only eight new wells out of our 22 well Phase VI program will be required to initially drive production to 135 mmcfe/d by Q2 2014 due to better than anticipated production from wells with revised completion techniques.

 Improving well performance in the Upper, Middle and Lower Montney such that the total combined final production test rate from 12 Phase VI wells completed to date is 115 mmcf/d(1). The 22 wells in our current program will provide inventory to sustain production through the balance of 2014.

 Drilling & completion of a record Middle Montney well at 100/12-2-76-12w6 which flowed at a final production test rate of 13 mmcf/d including 260 bbls/d of free condensate (“C5+”)(2) (natural gas and free condensate rate equivalent to 2,427 boe/d).. The estimated propane plus (“C3+”) shallow cut liquids yield is 42 bbls/mmcf (3) for this well.

 Confirmation that a Middle Montney average well has a 30 day average initial production rate (“IP30”) of 4 mmcf/d and an average C3+ liquids yield of 39 bbls/mmcf(4). The liquids content in east Glacier have been observed to be higher than the field average with C3+ liquid yields of up to 76 bbls/mmcf and C5+ liquid yields of 45 bbls/mmcf.

 Achievement of exceptional Upper Montney wells in east Glacier with the last 4 Phase VI wells demonstrating an average final production test rate of 15.7 mmcf/d including a record production rate of 21 mmcf/d from our Upper Montney well at 100/5-20-76-12w6. These results contribute to increasing the Upper Montney average well IP30 to 6.9 mmcf/d which generates superior economic returns at current gas prices(5).

 Achievement of successful Lower Montney wells, specifically in east Glacier, which proves up new areas for reserves and production growth. The average final production test rate from the last five Lower Montney wells (three in east Glacier, two in west Glacier) in our Phase VI capital program is 6.8 mmcf/d(6).

 Developed new completion and frac designs which have significantly improved well results in the multiple Montney layers at Glacier. Our experience has identified additional design changes which will be implemented in the future.

Notes:

(1) Based on each of the 12 wells’ final gas flow rate at the end of each production test period (average 69 hrs) normalized to our average gas gathering system pressure of 3,000 kpa.

(2) Normalized to an average gas gathering system pressure of 3,000 kpa. Production tested for 72 hours at a final test rate of 11.6 mmcf/d at 9,410 kpa with 20 bbls/mmcf of free C5+.

(3) Estimated based on a shallow cut liquids extraction process using rich gas analysis and recovered free C5+ from the production test.

(4) Based on the average of the estimated C3+ liquids yield for Advantage’s nine Middle Montney horizontal wells at Glacier from a shallow cut liquids extraction process.

(5) Based on 14 Upper Montney completed wells with revised completion techniques.

(6) Based on each of the five Lower Montney wells’ final gas flow rate at the end of each production test period (average 69 hrs) normalized to our average gas gathering system pressure of 3,000 kpa.

Glacier Development Plan & Phase VII Capital Budget

The Corporation’s development plan is based on an average natural gas price of AECO Cdn $3.75/gj (strip pricing as of January 28, 2014 for 2014 to 2017), recent well results and cost performance and targets doubling production at Glacier to 245 mmcfe/d (40,800 boe/d) in 2017 including the extraction of natural gas liquids. The development plan targets double digit production growth each year at Glacier with anticipated production at the end of each phase of 183 mmcfe/d in 2015, 205 mmcfe/d in 2016 and 245 mmcfe/d in 2017. Natural gas liquids production is expected to grow from approximately 900 bbls/day in 2015 to 1,500 bbls/d in 2017. Total capital expenditures during each 12 month development period are estimated to be between $210 million to $270 million with the drilling of approximately 33 wells. Significant growth potential exists beyond 2017 supported by the quality and size of our Montney resource and availability of future pipeline transportation capacity.

Our Phase VII Glacier capital budget targets to increase current production by 48% to approximately 183 mmcfe/d in the second quarter of 2015 including approximately 900 bbls/d of natural gas liquids from an initial 25 mmcf/d development in the Middle Montney. The wells in this program are designed to include an average of 17 fracs per well with an average expected cost of $6.1 million per well. Some of the wells will be drilled on six well pads to improve cost efficiency. Facility expenditures include additional compression, acid gas compression, and power generation. A shallow cut liquids extraction process capable of accommodating future liquids rich gas production growth will be installed at our current Glacier Gas Plant.

The following table outlines our Glacier Phase VII Budget and Guidance:

Our Capital Budget and multi-year development plan will be funded through cash flow, available credit facilities and cash generated from Advantage’s investments including the announced sale of Longview common shares. Based on an average natural gas price of AECO Cdn $3.75/gj (strip pricing as of January 28, 2014 for 2014 to 2017), our development program is targeted to deliver 190% cash flow per share and 100% production per share growth. Total debt to cash flow is estimated to average approximately 1.5 times during the 2014 to 2017 period.

By 2017, we estimate that a total of 250 wells will be drilled on our Glacier land block since development began in 2008. The remaining inventory of wells after attaining targeted production of 245 mmcfe/d in 2017 is estimated to be 1,280 wells consisting of 440 Upper Montney and Lower Montney wells and 840 Middle Montney wells. This large inventory of undrilled locations provides a strong platform to drive additional growth.

Strong Hedging Position Supports Development Plan

Advantage has entered into a number of natural gas hedges in support of our Glacier development plan. Our natural gas hedges will reduce the volatility of future cash flows through to March 2016. Our hedging positions are summarized in the following table:

Newly Acquired Montney Lands

In September 2013, Advantage acquired an additional 43.25 sections (27,680 net acres) of 100% working interest lands from the Alberta Crown. These lands were acquired for natural gas liquids potential in the Middle Montney and recent results in the Middle Montney at Glacier have further supported the liquids rich trend.

The Montney varies from an average formation thickness of 290 meters at Glacier to 230 meters in our new northern Valhalla land block and to a thickness of 185 meters in our southern two Wembley land blocks. A comparison of log responses between Glacier and the new lands illustrates similar porosity characteristics.

This newly acquired Montney acreage could provide another significant growth platform for Advantage pending future delineation success.